The Tax Cuts and Jobs Act (TCJA) of 2017 brought sweeping changes to the federal tax landscape, affecting both individuals and businesses. However, many of these tax provisions are set to expire after 2025 unless Congress enacts new legislation. As a business owner or individual taxpayer, it’s crucial to understand how these changes may impact your financial situation and to proactively adjust your tax strategy to avoid potential pitfalls.
At TAG CPAs & Advisors, based in Evansville, Indiana, we are committed to helping our clients navigate the complexities of the changing tax environment. In this article, we’ll dive deeper into the provisions that are set to expire and offer guidance on how you can prepare for the future.
Understanding the TCJA: Key Provisions Set to Expire
The TCJA introduced several tax benefits for businesses and individuals, but some of the most impactful provisions are scheduled to sunset at the end of 2025. Here’s a breakdown of the key areas that could affect your financial planning:
1. Individual Tax Rates
One of the most notable changes was the reduction of individual tax rates. The seven tax brackets introduced under the TCJA are set to revert to pre-2017 levels. This could result in higher taxes for many taxpayers unless Congress acts to extend the cuts.
2. Standard Deduction
The TCJA nearly doubled the standard deduction, which significantly reduced taxable income for millions of Americans. If this provision expires, the standard deduction could return to its lower pre-2017 levels, making it critical for taxpayers to adjust their tax planning strategies accordingly.
3. State and Local Tax (SALT) Deduction Cap
The TCJA limited the deduction for state and local taxes (SALT) to $10,000. Without further action, the cap could be removed or modified, leading to potentially higher deductions for those in high-tax states. However, planning around these changes will require careful consideration.
4. Corporate Tax Rate
For businesses, the TCJA lowered the corporate tax rate from 35% to 21%, significantly benefiting corporations. Should this rate revert, businesses could face higher tax liabilities, affecting profitability and financial planning.
What Could These Changes Mean for You or Your Business?
As we approach the expiration of these provisions, the uncertainty surrounding future tax legislation makes it more important than ever to stay informed and proactive. Here are a few key areas where the expiration of the TCJA could impact both individual taxpayers and businesses:
Increased Tax Liabilities: Without an extension of current provisions, you could see your taxes increase due to higher rates and lower deductions.
Complex Financial Planning: The expiration of certain deductions and credits could make tax planning more complicated, requiring a more nuanced approach to managing income, investments, and retirement savings.
Business Profitability and Investment: Businesses may face significant shifts in their tax obligations, making it important to assess current tax strategies, reinvestment plans, and long-term growth objectives.
How TAG CPAs & Advisors Can Help You Prepare
It’s essential to be proactive in your tax planning, especially with the looming expiration of key provisions under the TCJA. At TAG CPAs & Advisors, we offer expert guidance to help you navigate these changes and tailor your tax strategy to your unique circumstances.
Here’s how we can assist:
Individual Tax Planning: We’ll help you understand the potential impact of higher tax rates and reduced deductions, offering strategies to minimize your tax burden.
Business Tax Advisory: Our team can assess your current tax structure, providing insights on how to prepare for changes in corporate tax rates, deductions, and credits.
Customized Financial Planning: We’ll work closely with you to develop a financial plan that addresses both current tax concerns and future financial goals, ensuring you’re well-prepared for whatever changes may come.
What Steps Can You Take Now?
It’s never too early to start planning for the future. To effectively prepare for the possible expiration of TCJA provisions, consider the following steps:
Review Your Tax Strategy: With the help of a trusted advisor, analyze your current tax plan and identify areas where adjustments may be necessary.
Consider Accelerating Income: If individual tax rates rise, accelerating income or taking advantage of deductions now could help minimize future tax burdens.
Evaluate Your Investment Strategy: Changing tax rules may affect investment strategies, so it’s important to evaluate your portfolio and adjust as needed.
Consult with a Tax Advisor: Reach out to a qualified CPA firm, like TAG CPAs & Advisors, for a comprehensive review of your tax situation and personalized advice on preparing for 2026 and beyond.
Don’t Wait—Take Control of Your Tax Strategy Today
The expiration of key provisions under the TCJA is fast approaching, and taking a proactive approach to tax planning is essential to avoid surprises. At TAG CPAs & Advisors, we specialize in helping individuals and businesses prepare for these changes by offering tailored tax strategies that ensure long-term financial health.
If you have questions or want to learn more about how these changes could affect you, contact us today. Let’s work together to secure your financial future.
TAG CPAs & Advisors, Your Trusted Financial Partner in Evansville, Indiana
For more insights and updates, follow our LinkedIn page and connect with our Managing Partner, Brody O'Niones, CPA, for personalized advice. www.linkedin.com/in/brody-oniones-msa-ms-hsa-hfa-cpa-TAGcpasandadvisors
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